Creditors can collect their claims not only through court, but also through judicial or out-of-court settlement.
The settlement represents a much more favorable and economical option of the collection of claims, taking into account that court proceedings can possibly last for several years, and generate costs for the parties in the proceedings, such as court fees, representation costs, expert opinions, etc. The advantage of the settlement in relation to the judicial resolution of the dispute is reflected in the fact that the parties themselves reach an agreement on how to resolve their dispute.
According to the Law on Civil Procedure of the Federation of Bosnia and Herzegovina, the parties can conclude a judicial settlement on the subject of the dispute during the entire procedure, until its final conclusion. If the judicial settlement is concluded after the first-instance judgment has been passed, the acting court will issue a decision establishing that the first-instance judgment is without effect. Judicial settlement can refer to the entire claim or to one of its parts. The content of the judicial settlement is entered into the record and the settlement agreement is considered concluded when both parties sign the record. Such a settlement has the power of an enforceable title. If it was concluded in error or under the influence of coercion or fraud, there is a possibility of contesting the judicial settlement with a lawsuit filed within three months from the date of learning of the reasons for the contestation, and no later than within five years from the date of conclusion of the settlement.
Settlement of claims is most often agreed upon in such a way that the debtor commits to pay the principal debt in instalments in a certain amount of the annuity, while, on the other hand, the creditor waives the right to claim statutory default interest and litigation costs.
The creditor and the debtor can conclude an out-of-court settlement in front of a notary, which settlement can also have the power of an enforceable title. In any case, it is advisable for the creditor to hire a local lawyer, who will perform an assessment of the debtor’s solvency, prepare an appropriate contract and register collateral for the collection of claims. Our law office has been providing legal assistance to creditors in preparation and conclusion of settlement agreements with local debtors, as well as in the successful collection of individual claims of over 900,000 euros.
By Kerim Karabdic, Attorney at Law, Doklestic Repic & Gajin
